Having an effective estate plan is one of the most important things you can do for your family. The following are the five most important documents for estate planning.
1. Will. A will simply provides instructions for distributing your assets to your family and other beneficiaries upon your death. Your attorney can customize its provisions to meet your needs. You appoint a personal representative (also known as an “executor”) to distribute your assets
2. Durable power of attorney. A power of attorney is a legal document in which you name another person to act on your behalf. This person is called your agent or attorney-in-fact. You can give your appointed agent broad or limited management powers. You should choose this person carefully because he or she will generally be able to sell, invest and spend your assets.
3. Health care power of attorney. A durable power of attorney for health care authorizes someone to make medical decisions for you in the event you are unable to do so yourself. This document and a living will can be invaluable for avoiding family conflicts and possible court intervention if you should become unable to make your own health care decisions.
4. Living will. A living will expresses your intentions regarding the use of life-sustaining measures in the event of a terminal illness. It expresses what you want but does not give anyone the authority to speak for you.
5. Revocable living trust. By transferring assets into a revocable trust, you can provide for continued management of your financial affairs during your lifetime (when you’re incapacitated, for example), at your death and even for generations to come.
Once you have executed the appropriate documents for your planning needs, you should review them periodically to ensure they remain up-to-date given any significant changes (births, deaths, divorces, etc.) in your situation.
(This article was written by Wells Fargo Advisors Financial Network and provided courtesy of Richard & Dinah Shelley in Dry Ridge.)